Boingo Wireless, Inc.
Q2 2018 Earnings Call Transcript

Published: 2 Aug 2018

[Operator:]

Greetings, and welcome to Boingo Wireless Inc. Second Quarter 2018 Earnings Call. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Kim Orlando of ADDO Investor Relations. Please go ahead.

[Kimberly Orlando:]

Thank you, and welcome to the Boingo Wireless second Quarter 2018 Earnings Conference Call. By now, everyone should have access to the earnings press release, which was issued today at approximately 4

[David Hagan:]

Thanks, Kim. Good afternoon, everyone, and thanks for joining us to discuss Boingo's second quarter 2018 financial results. Before I dive into our record Q2 results, let me take a minute to mention the big news we just shared. By now, you've probably seen the announcement that Boingo has agreed to acquire Elauwit Networks, a leading provider of high-speed Internet to student housing and other multi-family properties. We're very excited about this deal as it enables us to quickly expand our successful military broadband business into new verticals. In fact, I'm here at Elauwit's headquarters in Charleston, South Carolina today, so it sounds like Pete and I are in 2 different places, it's because we are. We just finished the meeting to welcome Elauwit employees to the Boingo team and look forward to their contributions going forward. I'll be sharing a lot more with you about the deal in a few minutes, but for now, let's talk Q2. I'm pleased to share that our strong results and momentum continue. We've extended our streak of double-digit revenue growth to 15 consecutive quarters. Second quarter revenue was up 22% year-over-year to $59.6 million, which is well above the high end of our guidance range and the highest quarterly revenue reported in our company's history. This top line growth is a result of consistent execution against our overall strategy to leverage the explosive growth of mobile data. Boingo does this by acquiring long-term wireless rights at venues, building wireless networks at those venues and then overlaying our unique mix of products and services to monetize those networks. In addition to beating the high end of our revenue guidance range, we also exceeded the high-end range of adjusted EBITDA guidance. Adjusted EBITDA for the second quarter was $23.5 million, a year-over-year increase of over 43%. That's our 12th consecutive quarter of year-over-year EBITDA margin expansion, which reflects ongoing momentum from our 3 main business drivers

[Peter Hovenier:]

Thanks, Dave. I will begin by reviewing our financial results and key operating metrics for the second quarter ended June 30, 2018, and we'll conclude our financial outlook for the third quarter and full year 2018. Total revenue for the second quarter was $59.6 million, an increase of 21.6% over the prior year period. Revenue growth reflected strong performance in wholesale WiFi, military and DAS and was partially offset by year-over-year declines in retail and advertising and other revenue. As a percentage of revenue across diversified revenue streams and as compared to the prior year quarter, DAS represented 37% of revenue, down from 38%; military was 28%, unchanged from the prior year quarter; wholesale WiFi represented 23%, up from 15%; retail was 8%, down from 13%; and advertising and other accounted for 4% of revenue, down from 6%. In terms of total revenue contribution by category for the quarter, DAS revenue was $21.9 million, representing an 18% increase to the comparable period last year. Total DAS revenue was comprised of $16 million of build-out project revenue and $5.9 million of access fee revenue. The year-over-year improvement in total DAS revenue was primarily related to increased revenues from DAS build-out projects, which included a $1.2 million benefit from the adoption of the new revenue accounting standard, ASC 606, as well as increased access fee revenue from telecom operating partners. Military revenue was $16.7 million, representing an increase of 23.6% versus the prior year period. Growth was driven primarily by increases in average monthly revenue per subscriber and total military subscribers. During the quarter, we built up the network to cover an additional 1,000 beds, bringing our total footprint to 337,000 beds as of June 30. We believe the military vertical will continue to be a strong driver of recurring cash flow, with incremental opportunities to come primarily from the implementation of carrier offload and additional services on these bases. Wholesale WiFi was $13.5 million, representing an 85.3% increase over the prior year period, primarily due to higher partner usage-based fees and, to a lesser extent, increase in managed service fees from our venue partners, who pay us to install, manage and operate the network infrastructure at their venues. Retail revenue was $4.6 million, representing a 28.2% decline over the prior year period due to reduced retail subscribers and decreased retail single-use revenue. Advertising and other revenue was $2.9 million, representing a 12.1% decrease over the prior year period, primarily due to decline in the number of premium ad units sold during the quarter as compared to the prior year period. Now turning to our quarterly cost and operating expenses. Network access cost totaled $24.1 million, a 14.1% increase over the second quarter of 2017, primarily related to higher revenue share paid to our venue partners and increased depreciation for DAS build-out projects. Gross margin, which is defined as revenue plus network access cost, was 59.6%, up approximately 216 basis points from the prior year period. The increase in gross margin largely reflects the shift in diversified revenue streams, primarily driven by the increase in our higher-margin wholesale WiFi and military revenues. Network operations expenses totaled $12.7 million, an increase of 9% to comparable 2017 quarter, primarily due to higher personnel-related expenses, and hardware and software maintenance expense. Development and technology expenses were $7.5 million, an increase of 12% from the prior year period due, primarily, to increases in depreciation expense and hardware and software maintenance expenses. Selling and marketing expenses were $5.4 million, an increase of 5.1% to comparable 2017 quarter, primarily due to higher personnel-related expenses. General and administrative expenses were $6.7 million, a 40.2% decrease from the comparable 2017 quarter, primarily due to a onetime $2.8 million settlement expense in the prior year period as well as decreased stock-based compensation expense and professional services fees. Now turning to our profitability measures for the quarter. Net income attributable to common stockholders was $2.1 million, or $0.05 per diluted share, compared to a net loss of $8 million, or $0.20 per diluted share, in the prior year quarter. Adjusted EBITDA, a non-GAAP measure, was $23.5 million, an increase of 43.4% to comparable 2017 quarter. As a percent of total revenue, adjusted EBITDA was 39.33%, up from 33.3% of revenue in the comparable 2017 quarter. The second quarter marks our 12th consecutive quarter of year-over-year EBITDA margin expansion. Now turning to our key metrics. The number of DAS nodes in our network for the second quarter were 25,700, up 26.6% from the prior year period and up 6.2% from the first quarter of 2018. The number of DAS nodes in backlog, which represents number of DAS nodes under contract, but not yet active as of the end of the second quarter, were 11,500, up 4.5% from the prior year period and up 90 basis points from the first quarter of 2018. Our military subscriber base was 145,000 subscribers at the end of the second quarter, up 10.7% versus the prior year period and up 2.1% for the first quarter of 2018. Our retail subscriber base was 153,000 subscribers at the end of the second quarter, which was down 21.5% from the prior year period and down 8.9% from the first quarter of 2018. Connects, or paid usage on our worldwide network were approximately 69.3 million, up 32.9% from the prior year period and up 5.2% from the first quarter of 2018. Moving on to discuss our balance sheet. As of June 30, 2018, cash and cash equivalents totaled $12.9 million, down from $18.6 million at March 31, 2018. Total debt was $15.2 million, and we had $69.8 million available on our credit facility as of June 30, 2018. Capital expenditures were $21.8 million for the second quarter, which included $16.5 million utilized for DAS infrastructure build-out projects that are reimbursed by telecom operator partners. Our nonreimbursed capital expenditures were driven, primarily, by new network builds, managed and operated network upgrades and various infrastructure upgrades and enhancements. As a reminder, we estimate our annual maintenance capital requirements, which excludes all growth capital, to be approximately 3% to 5% of revenue. Free cash flow, a non-GAAP measure, was a negative $6.3 million for the second quarter versus a positive $7.4 million in the second quarter of 2017. We remain confident in our ability to generate positive free cash flow, although we may experience fluctuations from time to time related to the timing of receivables and working capital in a given quarter, as was the case in the first half of 2018. Further to this point, our accounts receivable collections in the first month of the third quarter of 2018 were over $18 million, which was an increase of over 300% from the prior month. We will continue to manage the business to generate positive free cash flow on an annual basis with a goal of maximizing long-term shareholder value by investing majority of our free cash flow in network expansion opportunities to drive growth. I will now turn to our outlook for the third quarter and full year of 2018. For the third quarter ended September 30, 2018, we expect total revenue to be in the range of $60 million to $64 million; net loss attributable to common stockholders to be in the range of $6.5 million to $3.5 million, or a loss of $0.16 to $0.09 per diluted share; and adjusted EBITDA to be in the range of $19 million to $22 million. For the full year ended December 31, 2018, we are raising our guidance as follows

[David Hagan:]

Thanks, Pete. As Pete just shared, we're really proud of our results. We beat the high end of the guidance range for both revenue and adjusted EBITDA for the second quarter in a row, and we've raised guidance for the second year in a row. We're very excited about leveraging our broadband expertise into a new growing market segment as the Elauwit acquisition positions us as a leader in the massive MDU space. We believe we are incredibly well positioned in the wireless infrastructure market to tackle the challenges of mobile data growth. With that, I'd like to open up for questions. Operator?

[Operator:]

[Operator Instructions] Our first question comes from the line of Anthony Stoss with Craig-Hallum. Anthony Stoss Congrats on the nice results and the acquisition. Dave or Pete, I'm wondering if you can share a little bit more information on Elauwit, for instance, the $3 million that you're assuming for Q3 revs in terms of profitability. I'd love to hear if they're making money or not? Also, what the margins profile is like for Elauwit? Also, maybe a sense of growth rate even for revenue for this year and what you expect going forward. And then I have one follow-up? David Hagan Thanks, Tony, for the quick question. Pete, do you want to take that one? Peter Hovenier Great. Tony, so on the $3 million for Q3, Elauwit does operate at a lower gross margin than we do. The revenue is split between a upfront build and then an ongoing recurring access fee to management-operated networks, which they take on. So they -- today, the split is about 55% of the revenue comes from the upfront build, which is lower margin, similar to like what we do as our DAS builds like 20%, and then the recurring access or recurring management fees is 45% of the revenue streams and that comes in at a higher margin of the build that comes in -- this is on gross margin basis -- comes in at about 50% gross margin basis. They are generating positive EBITDA, but we are expecting that we will not have any EBITDA contribution from Elauwit in 2018 because the EBITDA that would normally be generated we're going to use for onetime integration and transaction expenses. So you'll see more a flow-through from Elauwit EBITDA really going into 2019. In terms of growth rate, you should be seeing them growing revenue in the 20% top line rate. Anthony Stoss And then 2 follow-ups. Is there anything seasonal about Elauwit's business on a quarterly basis? And then, Dave, congrats on your CBRS. It's been a lot more in the press related to CBRS. I'm curious, your thoughts on the opportunity for you guys as you go forward on CBRS. David Hagan So right, yes. On - Pete, let me start. So on Elauwit seasonality, there is definitely seasonality to it. So you think about the student housing market. It's a big build-out. In fact, we're right in the middle of it for August and then September when all the kids go back to school. So that's a big build opportunity for them, and so that's their seasonality, and Pete can comment on that when I finish on CBRS if there is anything additional. Yes, on CBRS, we're really excited about it. We've been big fans of CBRS in the shared spectrum band opportunity. This is one of the first commercial networks, certainly, in an airport, but we think it's one of the first commercial networks. Period. And we did it in partnership with Dallas Love Field, and they have folks that are using it for back-office function. So it's not a consumer offering at this point because there aren't any devices, as you know, that have the chips in it. But we've got dongles on laptops and other devices so that they can interact with the network. And we think it's a sign of things to come. We think having a third alternative between licensed and unlicensed, that being shared spectrum, where carriers can use it, neutral host parties like us can use it, venues can use it, either in partnership with us or on their own. So we think it's a big opportunity. We think it's the beginning of 5G, and so we're quite excited about it. Pete, anything else on seasonality of Elauwit. Peter Hovenier Yes, just a little color. So you should think about -- on the student housing market, which is the bulk of what Elauwit does today. It's really -- from a revenue standpoint, you're going to see the contribution coming through in the May through August time frame, with the real heavy-lifting coming through June and July. So think of us May as the beginning and August as kind of the ending, with June and July being both heavy months.

[Operator:]

Our next question comes from James Breen with William Blair. James Breen Just a couple. One on the acquisition. Can you just talk about how you're going to fund the $20 million and what the payout looks like -- or the earnout looks like over the 3-year period? And then just on the DAS side, on the access fee side, it was up from about $5 million in the first quarter to $5.9 million this quarter, but only up from $5.6 million a year ago. Can you just talk about sort of what's happening on the access fees in DAS and what are the puts and takes there? David Hagan Pete, those are both yours. Peter Hovenier Right. So on the funding of Elauwit acquisition, we are using our credit line primarily to be funding the acquisition. We -- the $28 million that we announced, that will be primarily a draw from our credit line. The earnout, which will be earned based upon their -- hitting their revenue targets for 2018 through 2020 is really target growth rates. So we've worked to then come up with some aggressive growth targets which they were comfortable with. And if they hit those targets, they will get the full $15 million earnout. There would be targets that would be above the 20% range that I talked about just a few moments ago. David Hagan $15 million through 2020. Peter Hovenier Yes. James Breen So $15 million through 2020. Okay. Peter Hovenier Yes. So think about it as it's tiered. It's not $5 million each year, it's tiered, tied to the bigger months of overall revenue. James Breen Can you just give a little more color on what exactly -- how do you mean? Peter Hovenier So think of it as like, I think, $3.5 million, $4 million in 2018 is the target; $5 million is the target in '19, and I believe it's like $6.5-ish million coming in 2020 indtargets. David Hagan So it's skewed towards later years when the numbers get bigger, obviously. James Breen Okay. Perfect. And then just on the access fee side? Peter Hovenier Yes. So on the access fees, it's a [indiscernible] expectations. So we are doing a lot right now on the build side. You'll see this continue to increase. And ASC 606 did change some of the how we account for revenue, especially in the DAS side of our business, both in the build and the access fees. The access fees didn't change in a material way in aggregate, but the quarterization did change. So what you should be thinking of is access fees for 2018 should grow in the mid- to upper teens, which is what we've been saying all along. So you'll see more contribution come from access fees in Q3 and Q4 in terms of top line growth. James Breen Okay. Great. And then just on the acquisition, just trying to sort of narrow in on a multiple layer, $8 million contribution this year. Were they doing -- that's for about half the year. So -- right -- so were they doing $17 million, $20 million of revenue? Peter Hovenier Actually they did -- they'll be due -- in 2018, we expect them to do about $30 million in revenue. So what you're seeing there is -- question Tony just asked about the seasonality. The seasonality is definitely stronger in the May through August time frame. So we'll have contribution coming from Elauwit in August, but the bulk of the contribution is in the slower periods. James Breen Okay. So about 1x revenue for the purchase price. And then just on -- from a cost perspective there, any opportunity to move up the gross margins, given the framework you guys already have in place and just the larger scale and so forth? Peter Hovenier Yes, we do think there is margin opportunity, but what I will say, this deal is something we looked at from revenue synergy standpoint, not from a cost synergies. We like this deal from a revenue synergy standpoint and what we can do with it. Obviously, we're going to be frugal like we always are on the acquisition front in cost management. But this is really more about revenue synergies more than anything else. James Breen Great. Maybe just one more for David. You talked -- I think in the press release, it stated it has increased the addressable market by, I want to say, 16 million. Is that -- so is that on top of the 25 million or so that you had already sort of laid out in previous presentations? Where does the additional 16 million come from? David Hagan Yes. The multifamily market, the MDU market is 16 million units and 400,000 being built or added each year. That's a 20% growth rate. So it's a massive market. It's a very fragmented market. There's no real leader in the market. We feel great about our opportunity combining Boingo capability with Elauwit capability and, really, going after the market aggressively. I think it was pretty clear in our prepared remarks how their business model works, and it's the same business model that we had developed internally when looking at the MDU market. So we -- if we just did this organically, we would be doing exactly the way that they are, and that is, it's a wholesale play, it's a B2B play, it's not an end consumer play. So the penetration rate of student house units is, in fact, 100%. It's flow through from the lease. So our customers are really the property manager, property owner. And then on the -- on multifamily, it's very similar to that. While the customer can contract with the local cable co, we'll already be there, they already have 30 days on us, they'll be able to connect to the service on their first day walking into their apartment. And so Elauwit has had extremely high penetration rates on those properties well north of 60%. So we just -- we love their model. And to your profitability margin question, it's still a relatively small business. But as we scale that business, we think it'll be very profitable and generate a lot of cash flow over time. James Breen And I just have one more on just the structure around those contracts in that market. So you're providing WiFi to those buildings, but it sounds like the structure is kind of like a DAS structure with build revenue and access revenue. Is that correct? David Hagan That's correct.

[Operator:]

Our next question comes from the line of Timothy Horan with Oppenheimer & Co. Timothy Horan At a high level, can you talk about what you think the business model looks like with CBRS and anymore color you can give? Do you think the LTE spectrum would be better for offload for carriers instead of the WiFi offload. Just compare and contrast the benefits of one over the other. And do we need both because of just the overall usage? David Hagan Yes, Tim. Thanks for the question. I'll start. You've cut out a little bit, so if I don't address it all, please reask. So regarding CBRS and business model, the way to think about CBRS is it can be lots of different things. So it can look just like typical licensed spectrum that the carriers hold license for in a market. And we would deploy like we do DAS on their behalf. They could fund it or we could find it depending on how the economics would work. So that's the kind of the traditional -- just -- think of it just like another band of cellular. It could be -- and this is where the shared element of the spectrum characteristic comes in. Boingo -- we could deploy it at a venue on our dime and then charge the carriers to access that network. That would look more like a WiFi network, i.e. carrier offload in our terminology. And alternatively, we could do it in partnership with the venue, and the venue pays for it. And then the venue would charge either through us or directly by the carrier to access that network. So what's interesting about it is it's really flexible, right? So business models will develop over time, but I think all of the 3 examples that I just gave will give traction to the market. I think you'll see all types of deployments. So that's one of the things that we're most excited about. In terms of impact on offload, we look at it as just another bullet in the arsenal, if you will. We're technology-agnostic, as you know. So if a carrier wants to do CBRS because they do that more as a licensed spectrum than as WiFi offload, we're happy to provide that to them. So again, more lanes to the highway that we can provide, more ways that we can monetize. So we think it's very complimentary. Timothy Horan It just seems like, over time, sharing the infrastructure and sharing the spectrum in some form where you manage it in its entirety would just be the most efficient way to do it. I'm not trying to put words in your mouth, but it's kind of proven time and time again in wireless. So of all the different options out there, what do you think is the most logical option for carriers and for yourself in the industry? David Hagan Well, I think you'll get a different answer to that depending on who you ask. We, obviously, love the neutral host model. We'll aggressively pursue it within our neutral host model, but I think you'll see carriers deploy it on their own as well. So not unlike a carrier deploying their own spectrum on to a tower asset and then also coming to Boingo in that same market and partnering with us on a DAS network within a venue, I think you'll end up seeing CBRS and one of their carriers will deploy some of it themselves, and they'll use neutral host third party like us in other areas. Timothy Horan And then lastly, at a high level. In the MDU market, maybe you've touched on this, sorry, but what percentage of MDU markets have this type of apartments -- have this type of coverage right now? And I guess, a similar question. Do you see a world where you just blanket a building with WiFi and it's kind of part of the rents that customers are paying? That would also seem to be incredibly efficient. And if that's the case longer term, where do you think we are now with that process? David Hagan Yes, I think that is the trend. Certainly, when we did our due diligence and the research that we did before meeting the folks at Elauwit, we were out talking to property owners for the last 18 months. And there's general frustration with the players in the market, including the big cable cos and that's both from a property perspective and from an end-user perspective. This notion of moving into my apartment or a condo, typically moving into an apartment and just being able to get instant high-speed Internet is really attractive. And if you think about what the cable cos are going through with cord cutting, it's not about "can I get a 150 stations of cable television in my apartment," it's "give me high-speed Internet, I'll do over-the-top, I'll do Netflix, I'll do whatever I want" and that's the core. And so buildings are seeing it as a differentiator. If they can have that instant-on capability, they see that as a real win. It makes them more attractive in a property across the street. The first question that you asked is, what is the coverage today of buildings? Almost every building has coverage of some kind today. It's either a telco or cable co or Elauwit or an Elauwit competitor. But what you're seeing is, I think a massive change away from doing it with the individual cable cos in much more building wide, more of an infrastructure play, which obviously plays right into our strength and our strategy and our view of the market. Timothy Horan So just one follow-up and I'm sorry, last one. How much can you save -- like how much of a discount versus retail pricing do you think you can provide? And are the building owners aware of the whole over-the-top video phenomenon? Do they understand that customers just need broadband going forward, what you were referring to? David Hagan I think building owners absolutely do understand that. I mean, that's what they're hearing. They're not getting the "I have to have 150 channels." They're getting the message "I have to get high-speed internet, and I'll get everything else I need through that." So in terms of a discount to retail, Pete, do you want to take and answer with that? Peter Hovenier Yes. So in our analysis, and we did our diligence on Elauwit end market, we found that in many cases, especially in the MDU market, the cost was actually embedded into the lease or it would be a separate add-on. And we did see it was not substantially cheaper than the MSOs, but it did tend to be, I'd call it, in the teens in terms of discount from the MSOs. So it was -- but the differentiator is really less about saving money. It was more about a high-quality service that is everywhere throughout the infrastructure, and it's instant. You move in, you can literally sign up the day you move in. So similar to our military product where you're not waiting for a cable installer and gear, this is not much gear, if any gear, and it's an instant on. So it's powerful. And the building owners that we've talked to thought that this is the #1 amenity that new renters are looking for in the buildings that they're checking out.

[Operator:]

Our next question comes from Mark Argento with Lake Street Capital Markets. Mark Argento Just a couple of quick ones here. On the carrier offload growth, just wanted to talk a little bit about see additional venues coming and, obviously, more carriers onto that platform, that'd be helpful. And then just back to the MDU opportunity, in particular, I'm assuming you guys are just doing the data piece. You don't -- you're not touching any other part of a potential bundle with video by chance? David Hagan Thanks, Mark. I'll start with your second question. So you're correct, there is -- we're not doing double play, triple play, anything like that. It's all about the high-speed Internet. That's the core of what we're providing. The way Elauwit has handled TV, where there's been a need, they've had a third party provide that, and we would continue down that path with them. Your first question -- first part of the question on carrier offload additional venues. So we continue to roll out to more venues, both across military bases and our other airport plus other venues. You saw from the traffic in the revenue growth, obviously, the expansion was pretty amazing in Q2. We continue -- in terms of the everybody's favorite question when carrier #3 coming on, we continue to have those discussions. We continue to be bullish on the prospects of it, but we're not going to do a forecast on when we think we can announce that. But we like the progress that we're seeing, and the results are certainly strong. Mark Argento One follow-up for you, Pete, in particular. You had mentioned the amount of CapEx. Could you just refresh on how much you guys look to put out on your balance sheet this year in terms of new build-out? David Hagan That's yours, Pete. Peter Hovenier Yes. So what we've said is, on the DAS side, we expect that we'll deploy $80-plus million of DAS capital throughout 2018. And then in terms of really WiFi in military, the capital that's not -- can be refunded -- or not refunded, reimbursed by the carriers, that's going to be in the $25 million to $35 million range. Mark Argento And the capital build-out for the MDU opportunity, is that of kind of a similar economic model you guys are putting the capital out and then getting it back in fairly short order? Or how does that look like for the MDU? Peter Hovenier Yes. So the way that works today is Elauwit has structured a model similar to what we did with DAS. They have a large balance sheet. So they were now selling to the property owners and got the property owners to pay for the initial onetime network install, which by the time the network goes live, they've collected the money for the network install and then they can get their own recurring fee to manage and operate the network. That is the standard model as we look at this, and we believe that there is an opportunity to grow faster and get better returns by selectively looking and putting in some additional capital work, and that would mean less upfront build revenue and more in the form of recurring management fee revenue. So it's something we're looking at. We think it's a real opportunity, but today we do not see Elauwit at least in the near term being a consumer of cash.

[Operator:]

[Operator Instructions] Our next question comes from the line of Scott Searle with Roth Capital. Scott Searle A quick one on WiFi wholesale. You had been building out the footprint for the 2 carriers. Are you completely built out or deployed across your footprint right now? And can you give us some idea about are you getting above the basic minimums. Or kind of understanding or trying to understand the -- how much revenue is being driven by traffic and increased traffic patterns at this point in time versus just the rollout and deployment phase. David Hagan I'll start, Pete, and then you can talk the [indiscernible] volume stuff. So in terms of the build-out, we can add carriers 3 and 4 without further densification, i.e. capital. What we always have to manage is the backhaul. So we've put 1 or 2 more carriers on to the -- most of these venues would require some more backlog capacity. But that's -- as you know, in our model, backhaul is pretty inexpensive in the whole scheme of things. So we're prepared when we can bring them on. Pete, you want to talk on the volume side? Peter Hovenier Yes, happy to. So first and foremost, it -- what something we're very happy about is none of the carriers now will recognize a revenue based upon the volume commitment. So -- excuse me, the minimum volume commitment. They are all in excess of their volume commitment and so as they drive more traffic, we recognize and realize additional revenues and contribution to the P&L. And that's what you saw in this current quarter. We had a very, very strong quarter in Q2 in wholesale WiFi. You saw a lot of the flow-through to the bottom line. That's just highlights the model. We have a lot of capital we've deployed over the years in our venues. And as we can drive incremental traffic, which generates incremental revenue, it flows down at a very high rate to our net income as well as pretax and EBITDA. Scott Searle Okay. Great. And if I could, I had an additional question. It's a little bit more involved, but historically, when we look at your DAS business in traditional venues and how you've been building out, it's been growth in demand within the industry, and you guys have been managing that very well. But now we've got a bunch of factors that are coming down the pipeline, some of which we've hit on earlier today, CBRS, FirstNet, 5G, you throw small cells, and they're all very, very big incremental opportunities that dramatically expand the TAM in 2019, 2020. So I was wondering if you could kind of tick down the list quickly in terms of priorities from a carrier standpoint. How interested are they in talking about these items now? And are these revenue generators in the 2019 time frame? Or is it going to take a little bit longer, for example, to get some meaningful revenue driven by additional 5G nodes or small cells creeping up? CBRS, you get your first trials out there, but for waiting for handsets. But clearly, huge opportunity from a hosting standpoint. I just wondered if you could frame time lines in discussion and maybe when contribution starts to kick in. David Hagan Yes, great question, Scott. Yes, I mean, obviously, the activity levels are high. We didn't spend a lot of time on this call talking about small cells, but there is an immense amount of small cell planning with all 4 of the carriers that were involved with. So we think 5G is going to be just a major way in a positive way that's going to lift all boats in the wireless infrastructure sector. Every network that we've built in partnership with the carrier is going to be either added on to -- in most cases, added on to or, in some cases, replaced by 5G network densification. 5G will drive further densification on the networks that we have built. And then when you think about the new types of services, like CBRS and FirstNet, I mean, those are just new networks, frankly, that are going to get built. And those are all positive opportunities for us. We -- unlike, I think, the tower cos, where there is some risk of tower overlap, we don't -- there is no such thing as building overlap. So we see these as all positive drivers of future growth of the business. Now this is the question that you ask is timing, and we're doing a lot of work now. But in terms of revenue contribution, it will be, to me, end of '19, but really become more interesting in 2020 and beyond. If you think about 5G, right now, there really hasn't changed much deployed that is true stand-alone 5G. There is some attached to 4G LTE 5G that's been deployed. We've done some of that. But the big wave of 5G is the stand-alone, and that's really -- you see the analysis almost every day now, and T-Mobile just made a big win with one of the big OEMs about doing a multibillion dollar deployment. So you'll start to see it happening. But from Boingo perspective, it's end of '19 and then to '20. Pete, you want to augment that? Peter Hovenier Really, the only thing to add is small cells, we are seeing more demand in the near term. So I agree that CBRS, 5G and FirstNet is a little more longer term. Small cell, you will see some contribution in '19, not anything that's going to be hugely material. We don't think of it as a few points of revenue in terms of 5G contribution, but it becomes important. And what I mean by that is, it's a building block, and it's predominantly recurring access fee-type revenue. So it is, say, powerful, and it's consistent and reliable. So we are very, very excited.

[Operator:]

Ladies and gentlemen, we have reached the end of the question-and-answer session. And I would like to turn the call back to Mr. David Hagan for closing remarks.

[David Hagan:]

Thank you, operator. Thanks, everyone, for the questions. Next week, we'll be present at Oppenheimer's 21st Annual Technology, Internet and Communications Conference in Boston. And in September, we'll be at BofA Merrill Lynch's Media, Communications & Entertainment Conference in Los Angeles. We hope to see many of you there. Thanks a lot.

[Operator:]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.